Riyadh – Mubasher: Saudi Arabia’s non-oil private sector entered the last quarter of 2019 on a stronger footing, with business conditions improving at the fastest pace since August 2015, according to a report compiled by IHS Markit for Emirates NBD.

The seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers' Index (PMI) advanced to 57.8 points in October from 57.3 points in September.

"Growth momentum continued to build during October, with the headline PMI posting its highest figure since August 2015. Output and new orders expanded at faster rates, mostly driven by domestic sales,” Amritpal Virdee, an economist at IHS Markit, commented.

The upturn in business conditions seen in October was led by a steep and accelerated increase in new business, the sharpest seen since June.

Similarly, export sales increased, though at a slower pace, indicating that the main impetus continued to come from the domestic market.

"There were also signs of export conditions becoming more supportive, with panellists stating that they had seen an overall improvement in foreign demand conditions,” Virdee said.

The overall output of the kingdom’s non-oil private sector grew in October, hitting the highest level since December 2017, due to the increased demand.

As for purchasing activity, it witnessed a significant increase in the previous month as firms looked to bring their buying levels into line with higher output requirements and build up inventories.

Businesses that raised their stocks of purchases also commented on an expected uplift in activity in the coming months.

“Confidence towards year-ahead outlook for activity ticked up in October, with around 39% of panellists expecting an increase in output over the coming 12 months,” the report highlighted.

On the other hand, recent data showed that firms operating in Saudi Arabia's non-oil economy remained reluctant to take on additional staff.

The employment rate rose only modestly and at a slower pace than in September, as staff were recruited in order to fulfil company expansion plans.

"However, employment growth was marginal and slowed from September, as firms remained cautious about taking on additional staff,” Virdee added.

By the end of October, Saudi firms’ overall operating expenses were little changed as a slight rise in purchasing costs was offset by a marginal fall in average staff pay.

Prices charged for goods and services fell for the second time in the past five months during October, with the rate of contraction the fastest since April.

"At current levels, the PMI is indicative of GDP expanding at an annual rate of around 4%, which would be a notable acceleration in growth from the start of 2019,” Virdee concluded.